The Doctrine of Frustration and the Issue of Occupiers' Liability - Assignment Example

LAW The issue in this question relate to a possible discharge by breach and discharge by frustration. Discharge by breach will be considered first, moving on to discharge by frustration and finally an evaluation of the remedies available to Mildrive and Planright will be made A failure to perform contract, subject to mitigating factors will result in breach of contract. The breach will always give rise to a claim for damages, whether or not the nature of breach is minor or serious. The entitlement of an innocent party to treat contract as discharged, is dependent upon the seriousness of breach and that it goes to the root of the contract, that is, breach of a primary obligation, or the other party repudiates prior to performance. In the current scenario it can clearly be seen that the receiving of the machine was a condition and is a primary obligation. Further it can also be argued that their have been words or conduct which point out to the fact that the obligations under the contract will not be honoured. Repudiation prior to performance can either be explicit (Hochester v. De La Tour1) or implied (Frost v. Knight2). However, when deciding whether or not an anticipatory breach constitutes a repudiation as it has to be established beyond reasonable doubt that the other party has not intention of performing their side of the contract. Keating J stated in Freeth v. Barr3 It is not a mere refusal or omission of one of the contracting parties to do something which he ought to do, that will justify the other in repudiating the contract; but there must be an absolute to perform his contract. By the facts that have been provided, it can be argued by Mildrive that Planright did not want to perform the contract, however there are rebuttals which would allow the argument to fall. Firstly the criterion for proving the breach is beyond reasonable doubt and secondly Planright can argue that they had got the machines ready to be delivered and the acts of the Government were beyond their control, thereby leading to non-performance of the contract. Therefore, it is not viable to pursue an action for repudiation prior to performance of the contract. Frustration occurs when a contract which is entered into0, becomes impossible to perform. The doctrine of frustration allows the courts to imply terms into contracts which provide for breakthrough. (Taylor v. Caldwell4) The court allow it only as a defence and that contracts can expressly provide for the consequences for the occurrence of an event which renders performance impossibleIt has been stated that in contracts, where performance of a contract is dependent on the existence of a person or thing, there is an implied condition that if the person or thing perishes, and performance is impossible that would be a valid excuse. It is an implied term which is fictitious in nature (Davis v Contractors Ltd. v. Fareham UDC5).The implied term should meet the officious bystander test where it relies on the reaction of parties as Oh, of course to a suggestion of a term to have been provided in the contract. (Shirlaw v Southern Foundries6). The test of frustration is a question fact and not of law. Lord Macmillan in Denny, Mott and Dickinson Ltd. v. James B Fraser & Co. Ltd.7 stated It is plain that a contract to do what has become illegal to do cannot be legally enforceable. Therefore, upon the facts, the acts of the Government to ban the export and production of such machines will render it frustrated. The factors that affect the operation of the doctrine are dependent upon, force majeure clauses in the contract, however the facts are unclear on this and so it is assumed that no such provisions were existent in the contract. The general rule of the legal effects of frustration are to bring about the automatic termination of all obligations incurred under the contract. (Hirji Mulji v Cheong Yue Steamship Co.8. the repercussions of automatic dissolution at common law are to produce difficult consequences for the parties of the contract. The common law effect of frustration was to release the parties of any future obligations under contract. However, any obligations which have arisen need to be performed (Chandler Webster)9 However if the obligations have not arisen at the date of frustration, there are no obligations (Krell v Henry). This position has been changed by the decision of the House of Lords in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd.10 where the deposit of £1000 was recovered as it was found that the appellant had not received anything which they had bargained for and so the amount was recoverable. These acts of uncertainty have been resolved by the Law Reform (Frustrated Contracts) Act 1943 which deals with the results of frustration that is the recovery of money that has to be paid or already paid under the contract,compensation for expenses incurred in order to perform contract and financial readjustments. s.1(2) allows for money that has been paid to be recovered even when there is total failure of consideration, any moneys owed cease to be payable; and the discretion allowed to courts to award for any expenses incurred incurred by payee in order to perform prior to discharge and this is what court considers to be just. The courts applied the section in Gamerco SA v ICM/Fair Warning (Agency) Ltd.11 where it was stated that the courts are under no obligation that the loss be shared equally and total retention by defendant. Under the doctrine of frustration and the Act, Mildrive can argue that they have received nothing and should be given the deposit that they had paid. On the contrary Planright can argue that they have incurred expenses, but the court is not under any obligation, but on the facts there are clear grounds which would allow a reimbursement of the expenses that have been incurred by Planright. 2 The problem in this question is about a possible liability under occupiers liability and a claim for psychiatric injury. The issue of occupiers liability will be discussed first and then the psychiatric injury will be analysed. The occupiers liability for lawful visitors is dealt with under Occupiers Liability Act 1957 and in the instance of trespassers by the Occupiers Liability Act 1984. The establishment of a person being an occupier was stated in Wheat v E Lacon & Co. Ltd.12 To be exercising sufficient control over property and it can be clearly seen from the facts that Lister Properties Limited clearly had control. The claimant has to establish a duty of care and the fact that it has been breached. Trespassers have been defined clearly in (The Calgarth) and it is evident from the facts that Nadim clearly was a trespasser. A duty of care for trespasser arises under s.1(3) Occupiers Liability Act 1984, where the occupier has awareness of the existence of a danger or he has reasonable grounds to believe that the danger exists (shut eye knowledge) (Keown v Coventry Healthcare NHS Trust)13. Once the relationship of occupier and trespasser is found, there is not automatically a duty, the provisions of s.1(3), which states that an occupier of premises owes a duty to another (not his visitor) in respect of any risk which have been referred in subsection (1) if he is aware of the danger or has reasonable grounds to believe it exists; he knows or has reasonable grounds to believe that the other is in the vicinity of the danger concerned or that he may come into the vicinity of the danger (in either case whether the other has lawful authority for being in that vicinity or not); and he risk is one against which, in all the circumstances of the case, he may reasonably be expected to offer the other some protection. In the instance of children section 2(3)(a) of OLA 1957 states that: `An occupier must be prepared for children to be less careful than adults. If the occupier allows a child to enter the premises then the premises must be reasonably safe for a child of that age.’ This can clearly be illustrated in Glasgow Corporation v Taylor14 where a the claimant who was aged 7 died after he ate poisonous berries from a tree in a public park. There was no warning and the tree had not been fenced at all. On these grounds the court found the defendant to be liable and stated that the danger was not obvious to a child of that age. Since the question involves young children, it is usual for them to be accompanied by parents, however on the facts it is evident that the children went to play and it is usually not a practice to accompany children of an age of 14 to be accompanied by parents. The courts have found that parent should be reasonable and careful but age is a factor which court has taken into account. (Phipps v Rochester Corporation)15. The courts had been of the approach that when duty and breach were established and a damage resulted, liability was established. The courts have considered remoteness of damages in reaching their decisions (Hughes v Lard Advocate)16 and have interpreted foreseeability of risk widely. Courts have considered foreseeability of injury in varying cases. (Jolley v Sutton Borough Council)17 It is clearly evident from the law that the courts have adopted a stricter approach when finding against an occupier, where children are involved. By the facts it can be seen building is a derelict and that Lister should have been reasonably aware of the fact that children would come in as it would be attractive to children. Therefore even though Nadim would be considered a trespasser, duty, breach and damage would be established. The only defence that can be raised by Lister is that there has been contributory negligence by Nadim in his acts which resulted in the damage, which might be a mitigating factor, further if there has been a warning sign, that could be a defence (s 2 (4) (a)) which discharges the duty of care, however the facts do not point out to any signs so it is presumed that the sign did not exist. The issue of psychiatric injury caused to Pat will now be discussed. The courts gave three examples of primary victims in Alcock v Chief Constable for the South Yorkshire Police18 tat is claimants who feared for their own safety; rescuers; and involuntary participants. The requirements for a duty of care in nervous shock cases were stated by House of Lords in Alcock to be, a sufficiently close relationship of love and affection with the primary victim to make it reasonable foreseeable that the plaintiff might suffer nervous shock if they apprehended that the primary victim had been injured or might be injured. (For eg, relationships like, spouse or parents – child. In other relationship such as siblings or engaged couples, it will be necessary for the plaintiff to lead evidence to prove the existence of such a relationship),proximity to the accident, or its immediate aftermath, was sufficiently close in terms of time and space, they suffered nervous shock through seeing or hearing the accident or its immediate aftermath. (a person who was informed of the accident by a third party would generally have no claim). From the facts, Pat and the sufficiently close relationship with Nadim will be difficult to satisfy, however if she is the guardian she might satisfy this criterion, by providing evidence. She witnessed the aftermath and suffered nervous shock, so the other two criterion will be satisfied. However, on the facts it is still unclear whether the close relationship will be satisfied and therefore it is at the courts discretion to allow a claim and the courts have normally not allowed claims by aunts. BIBLIOGRAPHY CHESHIRE, G. C., FURMSTON, M. P., FIFOOT, C. H. S., & SIMPSON, A. W. B. (2007). Cheshire, Fifoot and Furmstons Law of contract. Oxford, Oxford University Press. PEEL, E., & TREITEL, G. H. (2007). Treitel on the law of contract. London, Sweet & Maxwell. ATIYAH, P. S., & SMITH, S. A. (2006). Atiyahs introduction to the law of contract. Oxford [u.a.], Clarendon Press. DEAKIN, S., JOHNSTON, A. C., & MARKESINIS, B. S. (2008). Markesinis and Deakins tort law. Oxford, Oxford university press. ROGERS, W. V. H., JOLOWICZ, J. A., & WINFIELD, P. H. (2006). Winfield and Jolowicz on tort. London, Sweet & Maxwell. Read More